Question 1 (b)
Positive and normative economics compared
5 marks
- Time to write
- About 10 minutes
Question
Question 1 (b) · 5 marksDifferentiate between positive and normative economics. (10,5)
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- Differentiate betweenSet the differences out in a table, basis by basis, not as two separate essays.
What the paper leaves open
As printed, the marks (10,5) are written once, at the end of part (b), for parts (a) and (b): 10 and 5 marks.
Write it in this order
- Read; underline the asks; jot your points 1 min
- 1 Meaning of positive economics 1 mark 1 min
- 2 Meaning of normative economics 1 mark 1 min
- 3 Differences set out point by point 1½ marks 3 min
- 4 Examples of each 1 mark 2 min
- 5 Link between the two and conclusion ½ mark 1 min
- Check: every ask answered, key terms underlined 1 min
Easy marks
- Meaning of positive economics (step 1, 1 mark): a definition in one or two lines. It opens the answer, so it takes a minute or two.
- Meaning of normative economics (step 2, 1 mark): a definition in one or two lines. A minute or two.
Try it first. About 10 minutes for 5 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Every economy has to settle what to produce, how to produce it and for whom, and different mechanisms (the market, central planning or a mix) can settle these problems in different ways, giving different allocations and distributions. Economists therefore ask two kinds of question about any mechanism: how does it work, and is it a good way to do things? The first kind belongs to positive economics, the second to normative economics.
Positive economics. Positive analysis studies how an economic mechanism actually functions and works out the outcomes it is likely to produce. Its statements describe cause and effect: what is, what was, or what will happen if something changes. Because such a statement is about how things work, it can in principle be checked against what actually happens, and it may turn out right or wrong.
Normative economics. Normative analysis evaluates a mechanism: it asks whether the mechanism, and the outcomes it produces, are desirable. Its statements carry a judgment about what ought to be, so they depend on the values of the person making them, and facts alone cannot settle them.
| Basis | Positive economics | Normative economics |
|---|---|---|
| Question asked | How does it work, and what will happen? | Is it desirable, and what should be done? |
| Nature of the statement | Describes or predicts | Judges or recommends |
| Basis of the statement | Cause and effect | Values and judgment |
| Settling a dispute | By looking at the evidence | By argument over values, not by facts alone |
| Typical words | is, was, will, leads to | should, ought to, better, fair |
- Positive: if the GST rate on two-wheelers is cut, more two-wheelers will be sold in India. This predicts an effect that sales data can confirm or refute.
- Normative: the government should cut the GST rate on two-wheelers so that families can afford them. This recommends a policy; whether it is right depends on how one weighs cheaper vehicles against lost tax revenue and more traffic.
How the two are linked. The distinction is not a sharp one. Positive and normative questions about the central problems of an economy are closely tied together, and neither can be properly understood without the other: a sound recommendation on what ought to be done needs a correct understanding of what the policy will actually do.
Conclusion. Positive economics explains how economic mechanisms work and what they lead to; normative economics judges whether those mechanisms and outcomes are desirable and what should be done. The first rests on cause and effect, the second on value judgments, though in practice the two go hand in hand.
Where the 5 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Meaning of positive economics | 1 |
| 2 | Meaning of normative economics | 1 |
| 3 | Differences set out point by point | 1.5 |
| 4 | Examples of each | 1 |
| 5 | Link between the two and conclusion | 0.5 |
| Total | 5 |
Report a problemopens an email to admin@getkunji.com with the question ID3105-Q1balready filled in.